S&P 500 will break real estate out as its own sector

From the New York website: Real estate investment trusts had a bit of a rough year despite the surge in the wider market, but a change in policy at the S&P 500 and MSCI are likely to provide a tailwind for the firms in 2016.

The two stock indices are planning to separate real estate securities from those of banks and insurance companies, creating a new industry sector.

The S&P 500 currently has 10 sectors. Real estate stocks – currently 25 companies – make up about 2.6 percent of market value, making it the second smallest sector after telecommunications as of Nov. 30, the Wall Street Journal reported.

As of late September, REIT stocks were trading at an almost 15 percent discount to what investors would pay for the properties that compose them, the largest gap in five years, according to Green Street Advisors.